Status Quo Vs. Irreversible Change: We Know How This Will End

Mark V. Hurd,
CEO at Oracle

The technology industry is at a critical inflection point, as the cloud and other new technologies represent the biggest and most significant changes in more than a generation. I believe this break with the past holds enormous potential for our customers—and poses an existential threat to technology companies that don’t move fast enough.

To understand the full potential of the cloud, you need to go back 30 years, to when the IT industry fostered a proliferation of systems that, in hindsight, resulted in the overwhelming system sprawl that now restrains most companies’ ability to innovate.

Back then, IBM dominated almost every major tech category—not just mainframes, but also microprocessors, operating systems, databases, storage, software development tools, and the custom applications IBM’s massive services organization developed with customers. But then an array of emerging competitors such as Oracle, Intel, Sun, and Cisco began to capture market share across the entire spectrum of enterprise technology, reducing business customers’ dependence on a single vendor.

At first, customers loved all the new choices. It was a procurement manager’s dream: Line up three or four players in any given market segment, issue an RFP, and let them beat each other up on price. In the process, customers created their own in-house IT organizations and hired CIOs to oversee storage, server, application, and other technical specialists, who assembled all of those piece parts and managed their ongoing operation in expensive data centers.

Meanwhile, IT organizations that couldn’t manage all of that heavy lifting themselves hired another emerging class of vendors—systems integrators. The integrators thrived on the complexity, promising to help customers assemble their disparate systems and even customize them. Systems integration became a $200 billion industry.

Dial forward to today. Most CIOs are now burdened with heterogeneous, really complicated—and hopelessly outdated—IT environments that are very difficult to manage and expensive to maintain. About 80% of CIOs’ IT budgets are locked up in those outdated platforms.

Meanwhile, their CEOs are going to them with an ultimatum: Help us take market share from competitors and carve out new business models by way of new digital investments—or find other work.

A New Focus

The challenge all CIOs and their organizations face in 2018 is to modernize and simplify their IT environments in order to launch new and expanded mobile, data analytics, Internet of Things, artificial intelligence, and other digital initiatives.

Cloud computing and new autonomous (self-patching, self-updating) systems powered by machine learning finally give CIOs the platforms to focus on those higher-level initiatives. Those platforms are optimized for performance, security, and innovation—all while reducing cost.

I believe the technology industry is on an irreversible course to change itself. As happened 20-plus years ago, when some players could not or would not adapt, there will be another round of casualties. There are tons of people rooting against this new way of doing things, both incumbent vendors with much to lose and some IT organizations that can’t let go of their do-everything-yourself mentality.

But there’s no stopping this technological progress. In this business, as in all industries, innovation beats the status quo every time.